I think the point was that DoctorHarte believes Terran should have taken Retteville, then seceded it, instead of running a Colony TO there, since it's allowed per game rules. He then proceeded to provide an example of a situation (Fictional situation of Terran being at War with Madina) where that would not be allowed. He stated that that wasn't the current case and thus Secession would have been an option instead of the Colony TO.
So nothing is against the rules in this case.
